States Unable To Properly Regulate Or Warn Consumers About Risky Short-Term Insurance Plans

By Consumers For Quality Care, on February 8, 2019

State regulators do not have the authority or capacity to regulate the marketing of potentially risky short-term insurance plans, according to Modern Healthcare. The article cites a new study from the Georgetown Center on Health Insurance Reforms, which examines states’ ability to regulate the marketing of these plans after a HHS regulation expanded the plans’ coverage duration from three to twelve months. As CQC highlighted previously, short-term plans have been scrutinized in recent months.

After speaking with regulators from Colorado, Florida, Maine, Idaho, Minnesota, Missouri, Texas, and Virginia, the study found that those states lack the ability to properly warn consumers about the potential risk associated with short-term plans. State regulators argue the plans are deceptive because many consumers do not understand that they might not be fully insured, as these plans often do not cover pre-existing conditions and offer fewer benefits, leaving consumers vulnerable to high out-of-pocket costs.

"State officials lack comprehensive data about which insurers actively market [short-term limited-duration plans] to their residents, which one official is calling 'one of our biggest blind spots,' " the study found.

The study ran searches in the states, as a consumer looking for coverage might, to see what was advertised in response to search terms like “Obamacare plans.”

Researchers found that the searches often led consumers to "lead-generating" websites that asked the consumer for a phone number or email and then forwarded that information to an insurance broker that sells short-term plans or other products that don't comply with the ACA.

While researchers note that the short-term plan insurers’ websites had more complete information on the plans, such as details on pricing and plan brochures, those websites do not appear in the searches’ top results.

States do have some ways to enforce marketing and coverage standards, including requiring the plans to cover specific benefits, levying fines and injunctions on insurers that deceitfully market the plans or even outright ban short-term plans, which California has done.

However, many state officials said that they are only able to enforce marketing standards retroactively, once they have received a complaint from a consumer.